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The Daily Dish - 2006-2011 archives for The Daily Dish, featuring Andrew Sullivan

A Woman Only Tax-Cut?

By The Daily Dish
Feb 17 2008, 9:14 AM ET

Alberto Alesina et al have proposed taxing women less than men. Greg Mankiw has a different solution:

Under the current regime in the United States, a typical woman married to a high-income man pays a high marginal tax rate from the first dollar she earns. Indeed, because she faces the payroll tax plus the top marginal income tax rate, she faces a higher marginal tax rate than her husband. (Recall that there is a cap on the payroll tax.) The situation is symmetric, of course: a typical man married to a high-income woman faces the same high tax rates.

If, however, income taxes were paid by individuals rather than by families, the secondary earner would face lower marginal tax rates on his or her initial earnings. This change might well induce an increase in labor supply and enhance efficiency.



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